Low-income customers cut back, Couche-Tard says
Revenues and earnings fall for convenience store and gas station chain
The head of Alimentation CoucheTard Inc. says lower-income consumers feeling “strained” by economic headwinds are cutting back on how often they visit the chain’s convenience stores.
These customers are also adopting more “value-seeking” behaviour and, in some cases, trading down for products they see as more affordable, chief executive Brian Hannasch said Thursday on a conference call with analysts to discuss the company’s latest results.
Couche-Tard is seeing these habits crop up most in the company’s salty, confectionary and grocery categories, which Hannasch said are the softest part of its business.
“We can look geographically and see that where we’ve got lower-income consumers, our results are worse and where we’ve got higherincome consumers the results are pretty stable,” he said.
Hannasch’s remarks came a day after his company reported its net earnings attributable to shareholders were $623.4 million (U.S.) in its third quarter, down 15.5 per cent from $737.4 million a year earlier.
The Laval, Que.-based business, which reports in U.S. dollars, said revenues for the quarter ended Feb. 4 totalled $19.6 billion, down from $20.1 billion during the same quarter last year.
The convenience store and gas station chain behind the CoucheTard and Circle K banners attributed the fall in earnings to a lower average road transportation fuel gross margin in the U.S. and softer customer traffic amid challenging economic conditions.
“We think this is transitory,” Hannasch said, when asked on the call about the softness in consumer spending.
“We don’t think this weakness in that consumer base will persist over multiple years.”
To address the number of customers turning to “value-seeking” behaviour, Couche-Tard has focused on marketing its private-label products, growing its loyalty program and offering Fuel Day promotions.
The private label portion of Couche-Tard’s business has been growing at double-digit rates, Hannasch said.
He also sees potential in the company’s beverages business, which benefited recently from the launch of purple Red Bull cans in Europe, where alcohol sales were also strong.
Couche-Tard will also be working to integrate European retail assets it bought from TotalEnergies.
The deal valued at 3.1 billion euros was signed in March 2023 and includes retail assets in Germany and the Netherlands, plus a 60 per cent controlling interest in its Belgium and Luxembourg entities.